I have one more question
A pizza parlor has a fixed intial cost of $180,000 and a variable cost of $4 for each pizza sold. If the pizza parlor charges $10 for each pizza, how many pizzas will it have to sell before it makes profit?
($180,000) / (10$ - $4)
To find out how many pizzas the pizza parlor needs to sell before making a profit, we need to understand the concept of profit in this scenario.
Profit is calculated by subtracting the total cost from the total revenue. The total cost comprises both the fixed initial cost and the variable cost per pizza multiplied by the number of pizzas sold. The total revenue is obtained by multiplying the price charged per pizza by the number of pizzas sold.
In this case, the fixed initial cost is $180,000. The variable cost is $4 per pizza. The price charged per pizza is $10.
Let's assume the number of pizzas sold is x. Now we can write the equation for profit:
Profit = Total Revenue - Total Cost
Profit = (Price per Pizza * Number of Pizzas) - (Fixed Initial Cost + Variable Cost per Pizza * Number of Pizzas)
Substituting the known values:
Profit = (10 * x) - (180,000 + 4 * x)
For the pizza parlor to make a profit, the result of the above equation should be greater than zero.
(10 * x) - (180,000 + 4 * x) > 0
Now, let's solve this inequality to find the number of pizzas needed to make a profit:
10x - 180,000 - 4x > 0
6x - 180,000 > 0
6x > 180,000
x > 30,000
Therefore, the pizza parlor needs to sell at least 30,000 pizzas in order to make a profit.